National Grid to begin recruiting businesses who will be paid to switch off if
needed to protect consumer supplies as a "last resort"

Britain may be forced to use “last resort” measures to avert blackouts in coming winters, Ed Davey, the energy secretary, will say on Tuesday.

Factories will be paid to switch off at times of peak demand in order to keep households’ lights on, if Britain’s dwindling power plants are unable to provide enough electricity, under the backstop measures from National Grid.

The Grid is expected to announce that it will begin recruiting businesses that will be paid tens of thousands of pounds each simply to agree to take part in its scheme. They will receive further payments if they are called upon to stop drawing power from the grid.

It is also expected to press ahead with plans to pay mothballed gas power plants to ready themselves to be fired up when needed.

“Both the new demand and supply balancing services will be used only as a last resort – and are a safety net to protect households in difficult circumstances, such as a hard winter or very high surges in demand,” Mr Davey will say.

Critics have suggested the measures, which were first mooted last summer, would represent a return to 1970s-style power rationing.

But Mr Davey will refute this, saying: “It is entirely voluntary. Nobody will get cut off. No economic activity will be curtailed.”

Mr Davey is on Tuesday also expected to publish a new gas “risk assessment” in response to the Ukraine crisis. He said this would show Britain could “comfortably” withstand extreme cold weather or the loss of key supplies.

Energy regulator Ofgem warned last summer that Britain’s spare power capacity margin – the difference between peak demand and supply – could fall as low as 2pc in winter 2015-16 as old power plants close and new ones are not yet built.

The risk of blackouts could be as high as one in four unless consumers cut demand, it said.

An updated assessment in coming weeks is likely to show that the margin in 2015-16 will remain tight as feared. But it is also expected to show that the risk of the situation resulting in blackouts for consumers has reduced, due to National Grid’s measures.

"Broad indications suggest that with the new balancing services in place the risk of supply disruptions for winter 2014-15 and 2015-16 has improved because National Grid now has new tools to help it manage lower margins," an Ofgem spokesman said.

Mr Davey said: “The lights are going to stay on."

He told the Telegraph businesses were “delighted” to get paid to reduce demand. Some would not actually “switch off” and would instead fire up their own on-site generators to replace grid supplies. Others, such as large-scale refrigeration firms, could temporarily cut power without any negative effects.

He insisted the plans were good value for consumers as they were “cheaper than building new power stations”. National Grid estimated in December that its measures could cost £75m but said this would be less than £1 per household.

The Grid is expected to say that the scheme for businesses to reduce demand will be used over the next two years, but mothballed plants will not be asked to fire up until winter 2015-16.

Mr Davey will say the capacity situation for this winter is now better than feared, and will be similar to last winter, even before National Grid’s measures, thanks in part to energy efficiency cutting demand.

"The good news is that we may be looking at an improved picture for 2014/15, compared to last year’s expectations... but the outlook for the year after next - 2015/16 – will still require one of the significant new interventions we have long been planning for."